Why “Zero Rating” is NOT the Same as 1-800 “Toll Free” Numbers

Editor’s note: The Net Neutrality debate has engulfed Indian social media, and amidst this is the country’s biggest telecom provider, Bharti Airtel. The company has come out with Airtel Zero, a marketing platform which ropes in companies with deep pockets to provide their apps and services for free to Airtel’s subscribers. The Net Neutrality activists are unhappy as it violates the core principle of open and free web. The principle of the net neutrality concept implies that equal treatment is given to all Internet traffic and prioritisation based on payment is seen as discrimination against others. Airtel and COAI who’re lobbying for anti net-neutrality laws imply that “Zero rating” is just like “Toll-Free” numbers which have been around for long. Here is why both are not the same.

1-800 or “toll-free” numbers

“Zero rating”

What is it?

When a customer wants to reach a brand or service provider, the latter pays the charges for the call.

To be more specific, companies sponsor infrequent, incoming calls from customers.

Rich/well-funded companies sign deals with telcos to exempt all of their traffic from data charges. It is also called “sponsored data.”

No. Since the calls being subsidized are
(a) infrequent,
(b) one-way, and
(c) initiated by customers, their impact on competition is self-limiting.

Yes. Since the Internet is THE always-on, pervasive channel for communication, shopping, entertainment etc., the ability for a company to make its traffic “free” can & will impact those who cannot afford to.

“Zero rating” is like a “regressive tax” on competition, meaning its impact is felt most by smaller companies. The bigger & richer companies are, the less the impact of “zero rating” on their health.

Does it harm consumers?

No. The cost of a single/few phone calls is too small to be relevant to the consumption decisions of most consumers.

Yes. Operators are cleverly using “zero rating” to force consumers to decide between companies they have deals with, and those they don’t. Once rich companies have succeeded in killing disruptive, smaller and younger competitors, they have less competition to deal with. Consumers will have less choice.

Does it harm India?

No. The volume and nature of toll-free calls means it causes no impact on national telecom priorities.

Yes. Telcos pay a license to run their networks over an extremely scarce resource that is owned by taxpayers: spectrum. Thus, by letting rich companies pay to “zero rate” their data, telcos are effectively selling that scarce spectrum to the richest companies.

Take Airtel, which uses 111.6Mhz of spectrum across its 223M subscribers. The amount of data it can deliver using that spectrum is limited. Thus, every time it “zero rates” traffic for one app, it is reducing the amount of spectrum available for carrying data for non-zero rated apps.

Are the two examples comparable?

Not at all. Companies can choose to set up their toll-free numbers with any service provider (the “terminating access provider”), and it would still work for all incoming calls from other providers.

No. Telcos and ISPs are the exclusive routes to reaching their subscribers, for which they can charge a fee companies have no option but to pay. Because there is no alternate way to reach Airtel’s customers than through Airtel.

Service Provider conflicts of Interest

Minimal. A service provider isn’t competing with a customer to whom it provides toll-free calling.

Significant. Airtel has every incentive to bias its network and policies to favour its Wynk music service over Gaana, either by making Wynk operate faster (prioritization) or by making Gaana more expensive (zero rating).

Raju PP Founder-Editor Raju is the founder-editor of Technology Personalized. A proud geek and an Internet freak, who is also a social networking enthusiast. You can follow him on Facebook and on Twitter. Mail Raju PP. Follow rajupp